Terra Solar Philippines Inc., which is an affiliate firm of Razon-led firm Prime Infrastructure Holdings Inc., will pursue utility-scale solar power projects of up to 3,500 megawatts with coupling of battery energy storage system (BESS) in the magnitude of 4,000 to 4,500-megawatt hours (MWh) to fulfill its 20-year power supply agreement (PSA) with Manila Electric Company (MERALCO).

Based on project blueprint submitted to Meralco, the scale of solar power installations it will be needing to supply the utility firm will be at least 2,500MW plus the battery storage systems.

Terra Solar, which is Prime Infra’s partnership with Solar Philippines Power Project Holdings Inc. of young businessman Leandro Leviste, submitted an unsolicited offer last year for the 850MW mid-merit supply requirements of Meralco.

The giant power utility company slated two rounds of bidding to challenge the proposal of Terra Solar – but both auction activities ended in a failure of bidding, hence, the parties moved to ‘negotiated deal’ arrangement.

According to Prime Infra President and CEO Guillaume Lucci, they will “move forward with Meralco on this record-breaking project that highlights solar power’s important contribution to strengthening the country’s energy security.”

He specified that while solar, “is normally looked at for peaking, (it) is now being made available by Terra Solar to answer Meralco’s mid-merit requirement, thereby addressing both the need for additional capacity and compliance with RPS (Renewable Portfolio Standards).”

A mid-merit capacity is the generated power that can fill supply gap or a facility that operates at a capacity factor between that of baseload generation to the peaker-generation assets in a power system.

Meanwhile, the RPS is a policy that requires distribution utilities, like Meralco, to secure prescribed percentage of their power supply portfolio from renewable energy (RE) generation.

Prime Infra conveyed that for the Meralco power supply deal, 600 MW will be available by 2026 while the additional 250 MW will be scheduled for delivery in 2027.

As culled from Terra Solar’s unsolicited tender lodged with Meralco, the headline rate and levelized cost of electricity (LCOE) it proposed in the PSA had been pegged at P6.0800 per kilowatt hour.

The proponent-firm calculated its offer based on 50-percent plant capacity factor (PCF) with no escalation – and anchored on the following components: capital recovery fee of P23,608.20 per kilowatt-year; variable operation and maintenance (O&M) fee of P0.3100 per kWh; line rental cap at P0.1000 per kWh; ancillary services cost recovery cap of P0.2800 per kWh and a zero-rated value added tax (VAT) incentive.

The development of the solar farms with integrated energy storage systems will be within Luzon grid sites – primarily in the Batangas-Cavite area, Nueva Ecija, Tarlac and Zambales.

Lucci emphasized “Prime Infra finds a sweet spot to pursue solar as we take advantage of the steep decline in installation costs over the past decade and the improved battery energy storage system technology that allows us to build an economically critical and socially relevant infrastructure at a scale the world has never seen before.”

In Prime Infra’s view, “the Terra Solar project is a model of dependable renewable energy, which represents a stable price not subject to fuel imports volatility for the rest of its 20-year contract.”

The Razon firm said the 850MW capacity it will supply to Meralco would be able to displace “annual consumption of approximately 1.4 million tons of coal or 930,000 liters of oil,” emphasizing that “this means reduction in both greenhouse gas emissions and import dependency for the country from 2026 to 2046.”